AMA study says competition among health insurers is shrinking

A single health insurance company dominates the commercial insurance market in more than 4 in 10 of the nation's metropolitan areas, according to an analysis by the American Medical Association.

The study released Monday showed that competition among health insurers continues to shrink, despite several proposed mergers falling through earlier this year, including deals between Aetna and Humana, and Anthem and Cigna. Previous studies have shown that consolidation among insurers leads to lower payments for doctors and higher premiums for patients.

In 2016, a single insurer captured at least half of the commercial insurance market share in 43% of the 389 metro areas analyzed, according to the AMA. That's up from 40% of metro areas in 2014. The AMA also said 89% of metro areas had at least one insurer with a commercial market share of 30% or more.

According to the study, Indianapolis-based Anthem has a bigger geographic footprint than any other health insurer. For-profit Anthem is the largest insurer by market share in 82 of 389 metro areas, followed by not-for-profit Health Care Service Corp., another Blue Cross and Blue Shield company, which is the largest insurer in 42 metro areas. UnitedHealth Group is the largest insurer in 26 areas.

The findings are part of the AMA's annual review of insurance market competition. It found that nearly 7 out of 10 commercial markets have a significant lack of competition, with 9 in 10 of the health insurance exchange markets lacking competition.

The 10 states with the least competitive markets were led by Alabama, followed by Delaware, Hawaii, South Carolina, Louisiana, Michigan, Kentucky, Vermont, Alaska and Illinois.

The study did not highlight what states had the most competitive markets, but according to the data, they include Wisconsin, followed by Oregon, New York, Washington, Colorado, Massachusetts, Pennsylvania, Ohio, Missouri and California. That's based on market concentration levels as determined by the Herfindahl-Hirschman Indices, which are used by the U.S. Justice Department and Federal Trade Commission to determine whether a merger will harm competition.

"After years of largely unchallenged consolidation in the health insurance industry, a few recent attempts to consolidate have received closer scrutiny than in the past, including the proposed mergers of Anthem and Cigna, as well as Aetna and Humana," AMA President Dr. David Barbe said in a statement. The AMA opposed those billion-dollar mergers, which were challenged by the Justice Department for threatening to harm competition and raise premiums for consumers.

The proposed Aetna-Humana and Anthem-Cigna mergers, both announced in 2015, were each abandoned after federal judges ruled against them.

Health insurers, however, have long argued that consolidation among healthcare providers is to blame for rising prices. Consolidation among hospitals and health systems in 2017 is likely to outpace 2016's mark, according to recent analysis from consulting firm Kaufman Hall. So far, there have been 87 provider deals made as of the end of the third quarter. Some of those include Catholic not-for-profit hospital giant Ascension's proposed acquisition of 12-hospital Presence Health, and a proposed joint venture between Carolinas HealthCare System and UNC Health Care.

"The role of health insurance providers is to ensure that every consumer they serve receives the greatest value possible—the best possible experience, outcomes and cost," Kristine Grow, a spokeswoman for insurance industry trade group America's Health Insurance Plans, said in response to the AMA analysis.